A tech giant that previously dragged the S&P 500 close to bear market territory is now supporting the U.S. stock market's rebound. NVIDIA's (NVDA, Financial) strong earnings outlook concluded an impressive earnings season for tech giants. As NVIDIA and Microsoft (MSFT) stocks near record highs, traders are betting on these companies to drive the market higher.
The S&P 500 is just 4% shy of its February peak, mainly due to improved trade relations and robust demand in cloud computing, software, electronics, and digital advertising. Since the market bottomed in April, Tesla (TSLA) rose 56%, NVIDIA 40%, and Microsoft 30%.
The "Magnificent Seven" index, which includes NVIDIA, Microsoft, Tesla, Apple, Alphabet, Amazon, and Meta Platforms, has outperformed the S&P 500 over the past eight weeks, contributing nearly half of the S&P 500's 19% rebound from April lows. Despite strong performances, the group lags the S&P 500 this year, a rare occurrence in the past decade.
While some investors remain cautious about high valuations, others see tech stocks as a long-term growth catalyst, especially with continued spending in AI computing. Meta Platforms and Microsoft have increased their capital expenditure forecasts, easing concerns about potential spending cuts.
